Annual expense

The total annual expense A g required to produce and sell a product can be written as the sum of the annual general expense Age. nd the annual manufacturing cost or expense A. g ... 

Example 2 Net Present Value for Different Depreciation Methods The following data descrihe a project. Revenue from annual sales and the total annual expense over a 10-year period are given in the first three columns of Table 9-5. The fixed-capital investment Cpc is 1,000,000. Plant items have a zero salvage value. Working capital C vc is 90,000, and cost of land C/ is 10,000. There are no tax allowances other than depreciation i.e., is zero. The fractional tax rate t is 0.50. 

As = base revenue from annual sales before tax. Ate = base total annual expense before tax. (NPV) = base net present value after tax. 

Fixed costs are those elements of piece cost that are a function of the annual production volume. Fixed costs are called fixed because they typically represent one-time capital investments (buildings, silos, processing machines, etc.) or annual expenses unaffected by the number of products produced (building rent, engineering support, administrative personnel, etc.). Typically, these costs are distributed over the total number of products produced in a given period. For plastics processes the principal elements are main machine cost, auxiliary equipment cost, tooling cost, building cost, overhead labor cost, maintenance cost, and the cost of capital. 

In 1975, the first commercial entity was formed to provide multicenter, outpatient clinical trial contracting services in the United States. This was the beginning of the modern Contract Research Organization (CRO) industry. It is now composed of thousands of domesfic and infernafional firms involved in medical producf evaluations in humans. The total annual expense globally for clinical trials and related functions necessary for commercial, governmenf, and academic therapeutic product development is estimated at US 50 billion, of which about US 15 billion is outsourced to the contract services market. 

Amortization Often used interchangeably with depreciation, but there is a slight difference depending on whether the life of an asset is known. If the period of time is known to be usually more than a year, this annual expense is amortization however, if the hfe is estimated, then it is depreciation. 

Regardless of whether the costs of unnecessary and unproductive validation efforts represent a significant portion of a laboratory s annual expense or a small decimal of its budget, managers have a fiduciary responsibility to control costs. If that responsibility is not exercised patients costs ultimately rise, a portion of needy patients are financially excluded from a beneficial treatment, and investors who might otherwise have funded valuable research and development efforts put their money in an Internet stock instead. Cost control isn t just good business it s good altruistic policy as well. 

Centralized laboratories offer several advantages. First, and perhaps most obviously, centrahzed operations can afford greater capital investment in state-of-the-art automation systems, top-level employees, and the most sophisticated equipment. While upgrading a Laboratory Information Management System (LIMS) on a regular basis may not be cost-effective for a small QA laboratory, it will be a practical annual expense for a company offering QA lab services to a number of clients. 

Example 1 Determination of rate of return on investment-consideration of income-tax effects. A proposed manufacturing plant requires an initial fixed-capital investment of 900,000 and 100,000 of working capital. It is estimated that the annual income will be 800,000 and the annual expenses including depreciation will be 520,000 before income taxes. A minimum annual return of 15 percent before income taxes is required before the investment will be worthwhile. Income taxes amount to 34 percent of all pre-tax profits. 

When investment comparisons are made, alternatives requiring more initial capital are compared only with lower investments which have been found to be acceptable. Consider an example in which an investment of 50,000 will give a desired result, while alternative investments of 60,000 and 70,000 will give the same result with less annual expense. Suppose that comparison between the 60,000 and the 50,000 cases shows that 60,000 investment to be unacceptable. Certainly, there would be no reason to give further consideration to the 60,000 investment, and the next comparison should be between the 70,000 and the 50,000 cases. This type of reasoning, in which alternatives are compared in pairs on a mutually exclusive basis, is illustrated in the following simplified example. 

Research suggests that the potential impact of a pharmacist s intervention in patient care is significant. In a well-publicized study, Johnson and Bootman calculated the annual cost of drug-related morbidity and mortality at 76.6 billion.22 In a follow-up project, they estimated that pharmacist intervention and pharmaceutical care could reduce the annual expense of... 

In 1983, Jari reported a 2.1 million operating profit (International Society for Tropical Forests 1985). This represents a rate of return of 0.2% on the original investment of 1 billion. Even for the Brazilian consortium who paid 280 million for Jari, the rate of return is only about 0.8% on their investment. Because annual sales at Jari are greater than annual expenses such as salaries and maintenance, the project should continue to operate in the near future. However, eventually the major capital item, the pulp mill, will become obsolete. Willingness of investors to recapitalize will depend on Jari s history of Investment return. 

Capital cost Capital cost unit Ratio of annual expense to capital Rate of operation... 

Figure 1.2. Estimated annual expenses based on a hypothetical 400 million total R D expense for the development of a NCE within a nine-year period (launch in 10th year). Data from Drews, J. and Ryser, S. (1997).4...

Total product cost or total annual expenses... 

When choosing whether to use a wet chemical or instrumental methods for assay of alkali silicate, the analyst must weigh the compromise between the usually higher precision of wet chemistry and the speed and versatility of an instrument. In addition, the purchase of an instrument involves a substantial capital expense with higher operating annual expenses due to the requirements for periodic maintenance and more expensive supplies. However, if a large volume of analyses are run, the cost per sample may be lower using an instrument. 

Incremental cost is the ratio of the change in the difference between treatment credit and equivalent annual expense to the change in annual gas production, based on a comparison with the carbon-limited case. 

Slips and falls may appear to be simple trivial accidents, but they result in thousands of deaths and cost billions of dollars in direct and indirect cost [59]. According to statistics compiled by the National Safety Council, falls are the second leading cause of accidental deaths. Over 40% of the dollars spent on workers compensation in the U.S. food service industry are due to the results of slips and falls. Annual expense from slips and falls is about 12,000 per restaurant for an average of 3-4 accidents per year. In 1988, for example, more than 12,000 people died from accidental falls. In public areas such as hotels, motels, and restaurants, slips and falls occur more frequently than any other accidents. Slips and falls can result in serious injuries, especially to the head and back. The floor surface is the single most important factor contributing to slips and falls. The slip-fall relationship between the floor snrface and the floor coating is also an important consideration, as it relates to liability and worker s compensation, especially in the fast food industry, where a floor can be wet or greasy. 

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